BOB GARFIELD: When the Mexican film "Amores Perros" was nominated for the best foreign film Oscar two years ago, it was the first time a Mexican movie had received the honor in more than a quarter century. That moment confirmed the resurgence of Mexican cinema after many years of meager output, so it came as a shocker, this month, when Mexican President Vincente Fox unveiled a budget proposal that would eliminate funds for the National Film School, the country's largest film studio and IMCINE, the main film funding agency. The announcement has been met with howls of outrage, and not just from Mexico's film community. This week, the mayor of Mexico City said the city would take over the film school and find work for displaced employees if the cuts are made. These critics say the president's plan would spell the demise of Mexican cinema as we know it. Hyperbole? Not necessarily, says Ken Bensinger, who's been covering the hullabaloo for Daily Variety.

KEN BENSINGER: I don't think it's too far-reaching to say that this will have a very dramatic impact on Mexican cinema. It's really the backbone of Mexican production, starting with the film school where something like 50 percent of Mexican directors are coming out of, to the studio where a lot of it's being done, and, and finally this funding organization which not only funds but also promotes film abroad and, and throughout the country. It really would sort of eviscerate the cinema here, and you would go from perhaps 30 productions a year to maybe five.

BOB GARFIELD:In other industries, privatization has in fact built markets, not subtracted from them. Is it possible that someone with some money could buy the studio from the government and could fill the gap with private capital to produce, you know, even more than the 30 films a year that are being made in Mexico right now?

KEN BENSINGER: It's definitely possible, but I think it's much more likely that someone who wants to make a shopping mall purchases that land, because it's just -- it's worth more in the short run that way. I think it's hard to convince people that Mexican film is a viable commercial product at this point. I was talking to someone at IMCINE who told me that there's not a single bank that offers financing and investment in Mexican film. It's quite the contrary in the U.S. where there's lots of banks crawling all over each other to get a piece of the action when it comes to about big blockbuster. Very few films produced here make any money in the long run.

BOB GARFIELD:But there must be a gathering horror in Mexico at the notion that the juggernaut that is Hollywood will entirely take over its industry by filling the Mexican multiplexes with American exports.

KEN BENSINGER: Well, I -- sort of sad to say, but the truth of the matter is most multiplexes are already full of American exports here. It's been a tooth and nail struggle as it is, and their feeling -- that is, the feeling of Mexicans filmmakers, producers, directors, actors, pretty much everyone in the industry here is that -- exactly what you said that, if these organizations disappear, it's just simply an impossible thing to fight against.

BOB GARFIELD:On the other hand, what Mexican filmmakers and culture vultures may wish for can be entirely different from what the actual Mexican moviegoer wants to see. I can't help but think of a moment I had a few years ago. I was driving down a commercial highway in Monterey, Mexico with a Mexican host who was displaying with pride all of the American fast food restaurants that lined the boulevard --Fuddrucker's and McDonald's and Chili's, of all things, and he was just delighted. He said, "And before it was just mountains." And they were lining up around the block to go into the Chili's. I, I guess people are lining up around the block to see Hollywood products. What kind of domestic reception did Y Tu Mama Tambien and Amores Perros have there?

KEN BENSINGER: The top-rated Mexican film in history in terms of box office was last year's Crimen de Padre Amaro -- Crime of Father Amaro. But it doesn't come close to what Spider-Man did in Mexico, doesn't come close to what The Matrix is going to do in Mexico. In fact, I think The Matrix in about two weeks will surpass what Father Amaro did in its ten week run in Mexico. This is a country that is extremely consumptive of American culture and has very mixed feelings about what it's consuming, and the truth of the matter is that Mexican film, and to some extent rightly so, has a more art house image to it, and this is a country of a hundred million people, and what appears to be the fact is that most of the people don't want to see the creative art house film. They do want to see what comes out of Hollywood. And I think, again, like you said, that's a pretty good additional disincentive for success in Mexican film.

BOB GARFIELD: Well, Ken, thank you very much.

KEN BENSINGER: Not at all.

BOB GARFIELD: Ken Bensinger writes for Daily Variety. He spoke to us from Mexico City.